Saturday, 11 May 2013

U-Report: IMF Says There Is Positive Outlook For Sub-Saharan Africa

Report By IMF Communications Department

The near-term outlook for Sub-Saharan Africa (SSA) remains broadly positive,
with growth projected to accelerate modestly to around 5½ percent in 2013–14,
following a year of strong growth in 2012, the International Monetary Fund
(IMF) said today. In its "May 2013 Regional Economic Outlook, Building Momentum In A Multi-Speed World",
the IMF said that these favorable prospects partly reflect the gradually
improving outlook for the global economy, while locally, investment in
export-oriented sectors is an important driver of growth going forward.“The positive outlook for the region is conditional on the implementation of
sound macroeconomic policies, although the necessary policy mix differs across
countries,” Ms. Antoinette Sayeh, Director of the IMF's African Department,
said. “Given the presence of risk, fast-growing countries with low policy
buffers should give priority to rebuilding buffers to handle adverse external
shocks, while safeguarding long-term growth and developmental needs,” she
added.Growth in the region is further supported by one-off factors in some
countries, such as a rebound from floods in Nigeria, recovery of agriculture in
regions previously affected by drought, and gradual normalization of activity
in post-conflict countries, the report said Regional inflation is envisaged to
decline further to below 6 percent by end-2014, reflecting the expectation of
moderating non-oil commodity prices and maintenance of appropriate monetary
policy, according to the report.Ms. Sayeh said that the main downside risks to the outlook relate to
uncertainties in the global economy, but possible adverse shocks would likely
not have a large effect on the region’s overall performance. However,
“countries with limited policy buffers and reliant on a narrow range of export
commodities, or more directly exposed to sources of risk, could experience more
severe adverse effects,” she noted.The report also shows that economic growth in sub-Saharan Africa remained
strong in 2012, with regional GDP increasing by 5 percent. Growth was
particularly strong among oil exporters and low-income countries, while
middle-income countries with closer ties to Europe saw a deceleration. The
smaller fragile states still lagged behind relative to the regional average,
and civil unrest was a drag on growth in a few countries. Inflation declined in
most of the region, reflecting moderation in the movement of global commodity
prices, improved local climate conditions, and tight monetary policy.The REO also includes three background papers on fiscal policy space,
increasing issuances of international sovereign bonds, and energy subsidies in
sub-Saharan Africa.Commenting on their main findings, Ms. Sayeh said: “One, while most
countries in the region are not constrained from borrowing by high debt levels,
many could find it difficult to raise sufficient financing for larger deficits
in the event of a downturn in economic growth. Two, the region’s growing access
to global capital markets reflects both easy global financial conditions and
good economic prospects of the region. To make the most of the renewed global
investor interest, countries should maintain prudent fiscal policies, consider
various means of financing, and follow best practices to ensure the most
favorable financing conditions. Three, energy subsidies in the region are
costly and crowd out spending on much-needed social and infrastructure
projects. Reforming energy subsidies could help countries replace costly
subsidies with better-targeted forms of social protection.”